The San Diego Unified School District's credit rating was downgraded by credit ratings agency Moody's Investors Service on Thursday.
The ratings on the district’s outstanding general obligation bonds were downgraded one notch from Aa1 to Aa2.
“The outlook on the district's ratings remains negative,” Moody's Investors Service reported. The move reflects “the district’s substantially narrowed financial flexibility after material draws on reserves in recent years.”
The move would not impact existing debt, but could impact the district's cost of borrowing money, according to the district.
“The credit rating agencies periodically review the financial position of public agency borrowers to make adjustments based on changing circumstances,’ said Ron Little, Chief Financial Officer for the district. “This rating downgrade, while disappointing, is understandable given the continuing fiscal challenges faced by the district and the pending midyear K-12 education budget cuts potentially coming from the state.”
The downgrade has no immediate financial impact on the district, Little said.
“This credit downgrade does underscore the importance of sound and prudent budget solutions for our 2012/13 budget now under development,” said Little. "We have been actively developing budget reduction strategies for the Board of Education to consider that would address the concerns raised by Moody’s regarding the district’s financial position.”
Emotions continue to run high for communities in the San Diego Unified School District because of the recent school closures from budget cuts.
School board member Scott Barnett talked with concerned employees and parents Thursday about the impending plans to shut schools down.
The meeting was held at Dana Middle School, one of the several schools slated to close.
“If we are going to save this district from going out of business, from going broke, that means the choices are going to be clear and I think that aside from parents fighting for individual school sites, they are going to have to speak up and say to the board, we need to make these large decisions. Otherwise the state will come in and force decisions that aren't good for anybody,” said School board Member Scott Barnett.
The district says that closing one school equals a half million dollars in savings.
In total, ten are on the list to be cut.